State lawmakers made their state health spending priorities clear with the release of the Legislature's one-house budgets this week – soundly rejecting Gov. Kathy Hochul's posed $1.2 billion in Medicaid cuts in the final spending plan due at the end of the month.

Senators and Assembly members want the state to rely on drawing down federal dollars to avoid cuts to programs that provide a lifeline to millions of New Yorkers. The state would apply for a special federal waiver for three years to maximize the money the state is reimbursed for Medicaid programs – following in California's recent footsteps.

The Assembly proposed a premium on Managed Care Organizations, or to tax insurance companies and allow the state to repay the tax obligation for each care plan. There's few details about how the waiver would change eligibility for Medicaid programs, but the Legislature estimates it would generate $4 billion in revenue that would be mandated to be spent on health care.

"We have worked to include in our budget investments and provisions that will get New Yorkers the care they need," Assembly Health Committee chair Amy Paulin said in a statement.

Democratic leaders argue it would essentially enable the Medicaid program to pay for itself.

"So that's an easy answer of how we pay for the Medicaid cuts without it impacting revenue from other sections of the budget," Senate Finance Committee chair Liz Krueger told reporters Tuesday.

State Republican leaders welcome the idea of more federal support, but feel uneasy about depending on revenue from Washington that could be uncertain.

"This may work... if it's reimbursed," Assembly Minority Leader Will Barclay said Wednesday. "We're certainly happy to get more money out fo the federal government, but I'm worried if we get addicted to this additional spending, maybe the federal government will say 'We're not going to do this anymore."

Lawmakers said they included the policy in their one-house budget in response to their confusion after Gov. Kathy Hochul released her spending plan in January. Hochul's budget would slash $1.2 billion from Medicaid programs affecting nursing homes, long-term care and other services in preparation for projected multi-billion-dollar budget gaps in the coming years, and as the program grows rapidly, or 40% over the last three years.

But Democratic lawmakers swiftly rejected the idea in their counter offers to Hochul's plan, arguing the governor took the wrong approach to health funding in the state.

"This disinvestment of over a decade cannot be corrected overnight, but we were moving in a positive direction, and then all of a sudden, this budget came around," Senate Health Committee chair Gustavo Rivera said Wednesday. "And then there were things – it was either cuts that made no sense or leaving money on the table."

Both one-house budgets significantly increased Medicaid reimbursement rates more than what Hochul wanted, or 3% across the board. The Assembly wants 7.5% for nursing homes and hospitals for $930 million more for providers. The governor proposed smaller reimbursement increases for specific services, netting about $33 million, but had largely proposed to keep reimbursement rates flat.

"If you are a hospital in a rural part of the state that serves overwhelmingly Medicaid patients, every time that somebody walks in the door, you lose money because the rates at which you get paid, the Medicaid reimbursement is so much lower than what you actually spend in providing the care," Rivera said. "This is not about spending, this is about investments. How do we put money down now so we don't have to pay more in the long run?"

Advocates said Wednesday they're encouraged that lawmakers also nixed Hochul's changes to the Consumer Directed Personal Assistance Program that allows elderly or disabled patients to choose their caregivers, or control how their services are delivered.

"Those changes would have resulted in over 100,000 people losing eligibility and about 150,000 workers getting a 12% pay cut," said Bryan O'Malley, executive director of Consumer Directed Action of New York. "And so the restoration of these cuts by the Legislature is tremendous."

The Senate and Assembly also included legislation in their budget requests to expand health care coverage for thousands of undocumented New Yorkers.

The bill, called Coverage For All, would direct the state health commissioner to request a waiver from the federal government to allow a surplus of federal funds to pay for undocumented people to enroll in the state's Essential Plan under the federal Affordable Care Act. 

It passed the Senate last session, but stalled in the Assembly.

"That would require us to draw down federal dollars," Assembly sponsor Jessica González-Rojas said Wednesday. "So actually it wouldn't even cost our state any money. It would be a savings, and we wouldn't have to use our emergency Medicaid money."

The Legislature's budget proposals would allow children enrolled in Medicaid to be continually enrolled until age 6.

The assemblywoman said the change would help decrease Medicaid costs growing out of control statewide by cutting down on administrative costs and preventing worse health outcomes for patients.

The Legislature's path to increasing state revenue to fill the Medicaid gap is opposite Hochul's plan – especially with proposed tax hikes on New Yorkers who make over $5 million. Assembly Speaker Carl Heastie told reporters Wednesday he's not concerned about negotiations leaving the state without enough cash to fund the program or any item in the budget.

"I'm not concerned that, at the end of the day when the governor, Senate and the Assembly come to an agreement, that we will have enough money to pay for what we agree on," Heastie said. "I'm very confident in that."

Hochul's executive budget included over 6% growth to the Medicaid Global Cap, including the proposed Medicaid savings actions totaling approximately $1B in reductions, according to the state Health Department.

"It is important to note that there are no proposed reimbursement declines to family caregiver rates in the proposed executive budget to achieve Medicaid savings," according to a statement from the department Wednesday.